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China hits U.S., South Korea with solar material duties, skirts EU decision

By Michael Martina

BEIJING (Reuters) - China's Commerce Ministry issued preliminary anti-dumping duties on imports of U.S. and South Korean solar-grade polysilicon on Thursday, but made no decision on tariffs on European Union exports of the raw material used to make solar panels.

Beijing's move, a widely expected hit on U.S. and South Korean producers, coincides with difficult talks between the EU and China to defuse a conflict over alleged dumping of Chinese solar panels in Europe.

That spat, according to EU officials, pushed Beijing to threaten duties on European wine exports and risks sparking a trade war in other goods, including steel.

"Though the investigation into ... imported EU solar-grade polysilicon is still pending, the cause-and-effect relationship between the dumping of products from the United States and South Korea and harm to China's domestic industry cannot be denied," the Commerce Ministry said in a statement on its website.

In Washington, the United States said it was "very disappointed" with the Chinese action because it also was in talks with Beijing on solar trade issues, including both solar panels and polysilicon.

"We are dismayed that China would take this step in the midst of those conversations," a spokeswoman for the U.S. Trade Representative said, adding the United States would closely examine China's anti-dumping order to see if it violates World Trade Organization rules.

Last October, the United States leveled steep duties on Chinese-made solar products, a move Beijing warned would provoke greater trade frictions in the new energy sector.

The European Commission, the EU's executive body, has also accused China of dumping billions of euros of solar panels in Europe below production costs.

In early June, it imposed punitive tariffs at 11.8 percent for two months, instead of an earlier plan for an immediate levy averaging 47 percent, leaving a window for Brussels and Beijing to negotiate.

The same month, U.S. Trade Representative Michael Froman told U.S. lawmakers the United States has had initial discussions with both the EU and China about a possible "global" agreement to resolve the solar energy trade disputes.

The German Economy Ministry this month said Beijing would levy no duties on EU polysilicon following work to reduce trade tensions over EU tariffs on Chinese solar exports.

Thursday's decision slapped hefty duties of 53.3 to 57 percent on U.S. polysilicon and duties on South Korean exports ranging from 2.4 percent to 48.7 percent.

U.S. subsidiaries of Renewable Energy Corp ASA were among those hardest hit.

Importers are required to pay preliminary duties in deposits starting from July 24, the ministry said.

Western solar firms have been facing off with their Chinese counterparts for years, alleging they receive government support and low interest rates to offer modules at cheaper prices.

The Commerce Ministry had merged its anti-dumping and anti-subsidy investigations into the three markets last fall, but some experts have said that the desire to reach a negotiated solution to the China-EU spat had delayed a decision on polysilicon duties.

Thursday's ruling made no determination on anti-subsidy duties.

Some Chinese panel makers like Yingli Green have warned against the duties because they would raise production costs.

More than 80 percent of the polysilicon used by Chinese panel makers in 2012 was supplied by the United States, Europe and South Korea.

(Additional reporting by Doug Palmer in Washington; Editing by Ron Popeski and Jackie Frank)

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